Report criticizes players in attempted sale of fair

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COSTA MESA A committee formed to review the sale of the OC Fair & Event Center, which never happened, found that some consulting contracts were hidden from public scrutiny, including one that went to former state Sen. Dick Ackerman.

Some fair directors called for a forensic audit at a meeting Thursday after the board reviewed the committee's final report.

The publicly owned grounds were the subject of intense fighting when the administration of former Gov. Arnold Schwarzenegger sought to sell real estate to deal with the state fiscal crisis. A grass-roots group, with the help of other elected officials, successfully defeated the privatization. But questions have lingered about who was behind the attempted sale and if some fair board members used public funds in their attempt to buy the property.

“Money was laundered,” said board member Nick Berardino, the general manager of the Orange County Employees Association, during the meeting. “It was hidden. It was laundered. It was intentionally done.”

Ackerman's former law firm, Nossaman LLP, received contracts that totaled about $100,000, according to Fair Sale Review Committee member Theresa Sears. About half of that went to an appraiser, and Ackerman acted as a liaison with local and state public officials, the report says.

But details of the arrangement were only revealed after public records inquiries, the report says, as the law firm was a subcontractor and paid by a separate joint powers authority.

Ackerman, reached by phone Thursday, said there was nothing improper in the relationship.

“They are totally off-based,” he said of the committee members. “A lot of subcontracts are paid through other contractors.”

Most of the fair directors in 2009, when sale talks were in full swing, formed a nonprofit corporation to purchase the grounds. Some activists raised questions about their conflicts of interest.

The report says that Ackerman's law firm helped form the nonprofit and billed LSA Associates, a fair contractor, for the work. While initially billed to a publicly funded account, Ackerman says those expenses were “backed out and billed separately” to the nonprofit, the OC Fair & Event Center Foundation.

Dave Ellis, a board member who was instrumental in the effort to sell the land, discounted the committee's work.

“It was clear that there was a narrative, and that narrative was going to be adhered to,” he said at the meeting. “It's speculation. It's conjecture.”

Yet another layer of contracting obscured public scrutiny, the report says. In 2009, the fair administration deposited $8 million into the account of the California Construction Authority, a joint powers authority that paid LSA and other fair contractors.

The fair chief executive at that time, Steve Beazley, said later that “the funds were sent to CCA to safeguard them from the state,” according to the report.

Beazley and other staff members should bear much of the blame for the financial maneuverings, Berardino said.

“You clearly failed to protect these board members,” he told other administrators at Thursday's meeting.

Beazley did not respond immediately to a phone call requesting comment.

The committee recommended that the state conduct an investigation into the joint power authority's role in the aborted fairgrounds sale.

It also recommended a forensic audit to determine if public funds were spent on the nonprofit and if there were any conflicts of interest, as well as to establish the total amount the fair board spent to promote the sale of the fairgrounds.

Besides the layers of contracts, the committee found it problematic that board members “were unfamiliar with open meeting laws or intentionally chose to ignore them,” the report says.

Board members emailed each other as a group and held phone conferences with Ackerman's firm, it says.

If a quorum of members participated in those discussions, they would have been subject to open meeting rules. But those meetings were not publicly noticed.

The committee also found that Ackerman's firm paid nearly $50,000 for an appraisal, although Beazley told state Assembly members Jose Solorio and Van Tran there had been no appraisal. Nor could the committee find any final report from the appraiser, Richard Fuller.

Formed in April, the Fair Sale Review Committee did not have the power to subpoena documents or to compel people to testify. Some people involved in the sale declined to be interviewed.

The sale was officially declared dead in July 2011, although the legislative authorization needed to sell the land remains on the books, according to the report.

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